Bad credit loans are in high demand. And if you do any research on "
bad credit loan", you'll find plenty of advice on how to get the lowest interest rate. You'll also find plenty of people willing to give you a
bad credit loan, but you'd be making a mistake to accept it.
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Unfortunately, most of what you'll find approaches the problem from the wrong direction. The way to get the VERY best interest rate on a bad credit loan is usually overlooked or concealed altogether.
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But before we continue, let's digress briefly and look at how significantly the higher rate for a bad credit loan affects the borrower.
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Let's say you want to buy a house, but have bad credit. No matter how diligently you shop for a lender, you're still be charged a higher interest rate for a bad credit loan than if you had good credit.
Will I get the same interest rates as if I applied through the bank directly Yes, amongst other things, your credit profile, affordability and loan to value ratio determine your interest rate on your home loan. All these details are captured into the lenders credit scoring models and your interest rate is calculated. Whether you apply through MortgageSA or through the bank directly, the same credit scoring model is used to determine the interest rate applicable to your home loan. However, our experienced home loan consultants are able to motivate further on your behalf.
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With good credit, you might get a mortgage loan at 6% interest. But a bad credit loan will cost you closer to 12%. Assuming you get a $100,000 mortgage over 30 years, the difference you'd pay in interest amounts to a monstrous $154,461.60 MORE because you have bad credit. That's over 1½ times the loan itself!
What's a Good Credit Report Rating While each lender decides what credit score it considers a good risk, if you're credit score is generally 650 or better, you will probably be considered a good credit risk (meaning, you're likely to pay off a loan on time and in full), and you'll therefore qualify for a prime (i.e., desirable) interest rate. If your credit report rating is between 620 and 650, you may also be qualified for a desirable loan, but you may need to provide the lending institution with additional documentation to prove that you're creditworthy.
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Now getting back to our original problem, how can you get a better interest rate for a bad credit loan? The answer is probably not what you were expecting.
If you have equity in your home, a mortgage refinance loan with bad credit can have significant benefits. You can drastically reduce your interest rate, consolidate your debt or change the term of your loan. Rather than use your home as collateral, a bad credit loan refinance allows you to incorporate your debt into the amount owed. One monthly payment, one low interest rate!
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The solution is to "think outside the box." The way to get a bad credit loan with the best interest rate is to NOT get one! Instead, spend a couple of months fixing your bad credit, and then look for a "good credit loan" instead.
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This answer probably comes as something of a shock to you. More than likely, several objections to this approach will come to mind.
Credit Rating Scale 1. "I need a loan NOW" or "It's not worth my while to wait until I repair my credit."
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Oh really? Well, is it worth a savings of $150,000 or more? Granted you may not be looking for a $100,000 loan. But even if you want to borrow only $10,000 or so, the better rates you'll enjoy with good credit will still save you several thousand dollars.
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2. "Fixing my credit will take too long, or it just isn't possible."
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It's often possible to make very a significant improvement in your credit rating in just a few months, and in some cases as little as 30 days.
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3. "I don't know how to repair my credit and can't afford to hire a credit repair agency"
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For a fraction of the cost of a professional agency, you can purchase a good book on credit repair that will walk you through the whole process.
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4. "Do-it-yourself credit repair is too difficult" or "I don't think I can repair my own credit"
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Don't be intimidated by the idea of fixing your own credit. If you can write a few letters, address, stamp, and mail them you can repair your own credit.
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Your decision comes down to this; you have two choices.
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1. You can spend some time (maybe a LOT of time) shopping for a bad credit loan with the lowest possible rate, and still end up paying thousands (even tens of thousands) more in interest.
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2. You can spend some time fixing your credit and spend those thousands on your family's needs, instead of paying them to your lender.
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Do you really think your lender needs your hard earned money more than you and your family need it? Anybody can work on fixing their own credit. That's right, anybody!
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Get a good book on credit repair and get started TODAY!
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This article may be freely distributed, but may not be altered
Credit Card With Bad Credit Jim Eastman is the support contact for http://www.ErasingBadCredit.com. People wanting to repair their credit rather than pay thousands too much for a bad credit loan, can visit the site and sign up for a free mini-coures on credit repair.
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Unsecured Loan For Bad Credit Jim Eastman is support contact for eBusiness Power who has a number of web sites. Those wanting more information can visit www.DynamiteInfoProducts.com
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